Prices of crude oil are on the downfall yet again and dropped to a new five-and-a-half year low. The price at which Brent crude oil traded was lower by 1.6% in the trading session on Tuesday at $46.65 per barrel. Prices of Brent crude oil fell by 5.4% in the trading session on Monday, after it lost 11.2% last week making it its seventh straight weekly fall.
Oil Prices to Stay Lower For Longer:
According to the note of Citi Analysts, the market is concerned with the fact that oil prices will stay lower for longer period of time. One of the analysts predicted that the price of crude would stay close to $40 a barrel for the first half of 2015.
Relentless Production of Oil Pressurizes Oil Prices:
November decision of Opec to maintain the output at 30 million barrels a day, instead of cutting production to shore up the oil prices, has added to the plunge that started in June. The relentless oil production from the US and the output from countries such as Iraq and Libya surpassed the estimates and coincided with a demand slowdown in Asia and Europe amid economic weakness. All of these factors have put substantial pressure on prices of crude oil.